Pizza Inn Holdings, Inc. Reports Results For Third Quarter Fiscal Year 2014

Company continues to grow Pie Five Pizza Co. concept

THE COLONY, Texas, May 14, 2014 /PRNewswire/ —

Third Quarter Highlights :

Adjusted EBITDA decreased $0.2 million to a loss of $0.2 million compared to the same quarter of the prior year
Net loss increased $0.1 million from the comparable prior year quarter to a loss of $0.5 million
Pizza Inn domestic comparable store franchise retail sales increased 0.8% year over year
Company-owned restaurant sales increased 36.2% year over year
Pie Five Company-owned average weekly sales per store increased 16.9% year over year
Continued growth in pipeline of Pie Five franchise restaurant openings

Pizza Inn Holdings, Inc. (NASDAQ: PZZI) today announced results for the third fiscal quarter ended March 30, 2014. The Company had a net loss in the third quarter of $0.5 million compared to a net loss of $0.4 million for the comparable period in the prior fiscal year. The increase in net loss from prior year was primarily due to higher general and administrative expenses, franchise costs attributable to growth of the Pie Five brand, and bad debt expense.

"The performance of the Pie Five concept was very strong in the third quarter," said Randy Gier, President and Chief Executive Officer. "Despite some negative weather impact early in the quarter, the average weekly sales per store for our thirteen Company-owned restaurants increased 16.9% year over year due to a 4.4% increase in comparable store sales and very strong results for the new restaurants opened in the past twelve months. I'm particularly pleased that these strong trends have continued into the current quarter."

"The progress we've made at Pie Five to hone our site selection process and concept prototype has had a clear impact on the performance of our four new Company-owned restaurants (including one relocated restaurant) and four new franchised restaurants opened this fiscal year. That group of eight new Pie Five restaurants generated average weekly sales per store in the third quarter that were 45% higher than that of the existing eleven Company-owned and franchised restaurants," continued Gier.

"Later this week, our Richmond franchisee will open the 20th restaurant in the Pie Five chain and we expect the number of Pie Five restaurants in operation to double by the end of the 2014 calendar year as our new franchisees open their first or second restaurants in markets across the country. To fully capitalize on the momentum in the Pie Five concept we are also accelerating the development of Company-owned restaurants in multiple metropolitan areas. To prepare for this growth we recently added several strong, experienced members to our management team, including a new Chief Financial Officer and a Vice President of Real Estate Development," continued Gier.

"The Pizza Inn system also demonstrated improved performance in the quarter, with an improved trend of comparable store sales and store count," said Gier. "The hard work by our restaurant support team and our Pizza Inn franchisees is paying off as we bring stability to the system", added Gier.

Total revenues for the third quarter and the comparable prior year quarter were $10.9 million and $9.8 million, respectively. Third quarter franchise revenue increased slightly as compared to the prior year as franchise fees from new Pie Five franchisees offset decreased international royalties. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened.

Third quarter food and supply sales increased by approximately $0.4 million, or 5.5%, as compared to the prior year primarily due to an increase in sales to franchisees as a result of increased domestic franchisee retail sales and higher food commodity costs passed through in prices. Third quarter Company-owned restaurant sales increased $0.7 million, or 36.2%, as compared to the prior year as a result of the opening of two new Company-owned Pie Five restaurants in the second half of fiscal 2013 and four new Company-owned Pie Five restaurants in fiscal 2014 (one of which was a relocation of an existing restaurant), partially offset by the closing of one Company-owned Pizza Inn restaurant at the completion of its lease in fiscal 2014. Third quarter general and administrative expenses increased $0.3 million over the prior year to support growth for new Company-owned Pie Five restaurants and a legal settlement related to patent litigation, partially offset by reduced stock compensation expense.

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Pizza Inn Holdings. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of Pizza Inn Holdings will be achieved.

About Pizza Inn Holdings, Inc.:

Headquartered in the Dallas suburb of The Colony, TX, Pizza Inn Holdings, Inc., is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, Pizza Inn Holdings Inc. owns and franchises approximately 275 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI". For more information, please visit www.pizzainn.com.

Contact:
Tim Mullany
Chief Financial Officer
Pizza Inn Holdings, Inc.
469-384-5000


PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
*(In thousands, except share and per share amounts)*
*(Unaudited)*



		Three Months Ended		Nine Months Ended
		March 30,	March 24,	March 30,	March 24,
		2014	2013	2014	2013


REVENUES:		$ 10,912	$ 9,781	$ 31,281	$ 30,767

COSTS AND EXPENSES:
	Cost of sales	9,570	8,460	27,028	26,127
	General and administrative expenses	1,130	840	3,314	2,995
	Franchise expenses	677	608	2,150	1,675
	Pre-opening expenses	4	82	160	249
	Bad debt	93	45	203	135
	Interest expense	34	58	113	197
		11,508	10,093	32,968	31,378

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES		(596)	(312)	(1,687)	(611)
	Income tax benefit	(159)	(22)	(527)	(170)
LOSS FROM CONTINUING OPERATIONS		(437)	(290)	(1,160)	(441)

	Loss from discontinued operations, net of taxes	(14)	(100)	(39)	(127)
NET LOSS		$ (451)	$ (390)	$ (1,199)	$ (568)

EARNINGS PER SHARE OF COMMON STOCK – BASIC:
	Loss from continuing operations	$ (0.05)	$ (0.04)	$ (0.14)	$ (0.05)
	Loss from discontinued operations	–	(0.01)	–	(0.02)
	Net loss	$ (0.05)	$ (0.05)	$ (0.14)	$ (0.07)

EARNINGS PER SHARE OF COMMON STOCK – DILUTED:

	Loss from continuing operations	$ (0.05)	$ (0.04)	$ (0.13)	$ (0.05)
	Loss from discontinued operations	–	(0.01)	–	(0.02)
	Net loss	$ (0.05)	$ (0.05)	$ (0.13)	$ (0.07)

Weighted average common shares outstanding – basic		8,771	8,021	8,566	8,021

Weighted average common and
	potential dilutive common shares outstanding	9,290	8,267	9,109	8,198




PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
*(In thousands, except share amounts)*


ASSETS				March 30, 2014 (unaudited)		June 30, 2013

CURRENT ASSETS
	Cash and cash equivalents		$	365	$	919
	Accounts receivable, less allowance for bad debts
		of $417 and $228, respectively		3,679		3,139
	Notes receivable			123		292
	Inventories			1,601		1,615
	Income tax receivable			343		343
	Deferred income tax assets			943		882
	Prepaid expenses and other			336		307
		Total current assets		7,390		7,497

LONG-TERM ASSETS
	Property, plant and equipment, net			5,652		4,711
	Long-term notes receivable			14		40
	Long-term deferred tax asset			657		168
	Deposits and other			430		119
		Total assets	$	14,143	$	12,535

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable – trade		$	2,178	$	1,572
	Accrued expenses			1,611		1,749
	Deferred revenues			154		169
	Bank debt			375		669
		Total current liabilities		4,318		4,159

LONG-TERM LIABILITIES
	Bank debt, net of current portion			750		1,856
	Deferred revenues, net of current portion			680		370
	Deferred gain on sale of property			40		59
	Other long-term liabilities			70		22
		Total liabilities		5,858		6,466

COMMITMENTS AND CONTINGENCIES (See Note 3)

SHAREHOLDERS' EQUITY
	Common stock, $.01 par value; authorized 26,000,000
		shares; issued 15,849,615 and 15,312,680 shares, respectively;
		outstanding 8,730,215 and 8,193,280 shares, respectively		158		153
	Additional paid-in capital			13,584		10,174
	Retained earnings			19,179		20,378
	Treasury stock at cost
		Shares in treasury: 7,119,400		(24,636)		(24,636)
		Total shareholders' equity		8,285		6,069
			$	14,143	$	12,535




PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
*(In thousands)*
*(Unaudited)*

			Nine Months Ended
			March 30,	March 24
			2014	2013

CASH FLOWS FROM OPERATING ACTIVITIES:

	Net loss		$ (1,199)	$ (568)
	Adjustments to reconcile net loss to
		cash (used) provided by operating activities:
		Depreciation and amortization	1,056	958
		(Gain) loss on sale of assets	(40)	129
		Stock compensation expense	45	135
		Deferred taxes	(551)	(243)
		Provision for bad debts	203	44
	Changes in operating assets and liabilities:
		Notes and accounts receivable	(548)	(172)
		Inventories	14	330
		Accounts payable – trade	606	(21)
		Accrued expenses	(90)	129
		Deferred revenue	276	61
		Prepaid expenses and other	(367)	(102)
		Cash (used) provided by operating activities	(595)	680

CASH FLOWS FROM INVESTING ACTIVITIES:
	Proceeds from sale of assets		58	184
	Capital expenditures		(1,987)	(1,547)
		Cash used for investing activities	(1,929)	(1,363)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from sale of stock		3,288	–
	Proceeds from stock options		82	–
	Borrowings of bank debt		–	3,160
	Repayments of bank debt		(1,400)	(2,252)
		Cash provided by financing activities	1,970	908

Net increase (decrease) in cash and cash equivalents			(554)	225
Cash and cash equivalents, beginning of period			919	590
Cash and cash equivalents, end of period			$ 365	$ 815



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION


CASH PAYMENTS FOR:

	Interest		$ 113	$ 248
	Income taxes – net		$ 1	$ (84)




	Three Months Ended		Nine Months Ended
	March 30,	March 24,	March 30,	March 24,
	2014	2013	2014	2013
Net loss	$ (451)	$ (390)	$ (1,199)	$ (568)
Interest expense	34	58	113	197
Income Taxes – Continuing Operations	(159)	(22)	(527)	(170)
Income Taxes – Discontinued Operations	(7)	(8)	(20)	(66)
Stock compensation expense	15	45	45	135
Depreciation and amortization	370	340	1,056	958
Adjusted EBITDA	$ (198)	$ 23	$ (532)	$ 486

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SOURCE Pizza Inn Holdings Inc.